Deal with Amex deemed big win for Travel Leaders

Travel Leaders Group CEO Ninan Chacko said the redemption of Membership Rewards points is a new revenue stream. Photo Credit: Jamie Biesiada

LAS VEGAS -- Analysts called Travel Leaders Group's (TLG)
partnership with American Express that enables its agents to service Gold and
Platinum card members with exclusive travel discounts and amenities a big win
for TLG, albeit a surprising one.

"It certainly is a big win for [TLG] in terms of the
potential audience that this could provide for members of their agency network,
and it's a big value-add to be associated with [TLG]," said Henry
Harteveldt, founder of Atmosphere Research Group.

Under the program, personal and business Gold and Platinum
card members will be paired with agents who can book a number of exclusive
offers through the Travel Collection by Travel Leaders Group, including flight
discounts, hotel amenities and more.

Harteveldt did find it "notable" that American
Express outsourced services to TLG when it operates American Express Travel and
a network of retail agencies.

According to American Express vice president of corporate
communications Charlotte Fuller, American Express Travel will continue offering
travel services to cardholders, including Centurion card members, who are not
included in the TLG program.

"TLG will provide us with additional channels to bring
out unique travel benefits and services to more card members," she said.

Amex will help TLG agents compete in a crowded marketplace,
said Roger Block, president of Travel Leaders Network.

"When I was an agency owner, I would have killed for
the opportunity to offer lower prices or offer more shipboard credits than my
competitors without having to lower or rebate my commissions," he told
agents. "I don't believe there's anyone in this room that doesn't want
that advantage, and with our new partnership with American Express, that's what
you get."

Stephen McGillivray, TLG's chief marketing and
communications officer, agreed, calling Apex "as big of a game-changer for
my business as I can think of."

Any TLG agent can participate for free after completing
online training that takes about eight hours. They will also be trained in
helping clients apply for American Express Gold or Platinum cards and will earn
commission when clients redeem their Membership Rewards points, something also
covered in the training.

Industry consultant Jack Mannix said the program will likely
be a win for TLG, assuming it is promoted heavily enough to card members.

"I'd take it," Mannix said. "If I was one of
the Travel Leaders franchisees or [agents], I'd be happy adding one more thing
to my arsenal of marketing tools."

TLG CEO Ninan Chacko cited several opportunities the program
offered agents, including being able to better serve their Gold and Platinum
card customers, new revenue streams from Membership Rewards redemptions and
from signing up card members and the potential to gain clients that might not
have worked with an agent before.

"All of a sudden, it opens up a vista of new
opportunities that I think are purely incremental to what they do today and
actually coexist with what they do today," Chacko said.

More than 200 agents have signed up to beta-test the
program. Chacko said testing is in its earliest stages, but the program will
roll out to more agents over time.

Lindsay Boyd, managing member and
founder of Tamandare Travel in Wood Dale,
Ill., is part of the beta test. He said the ability to do things like redeem
Membership Rewards elevates the services he already offers.

"This gives me the ability to continue to offer my
client the high-quality services that they have been accustomed to with me and
put them into another league moving forward," Boyd said.

Kamen Blackwell, president and CEO of Jacksonville, Fla.-based
TripVax, is also involved in the test. He said the prestige that comes with the
American Express brand is attractive to agents.

"That says a lot about who you are and just the level
of service [clients] can expect from you," he said.

Chacko declined to disclose the financial details of the
partnership between TLG and American Express, only saying it is a multiyear
partnership with details still left to sort out.

"There's a long row to hoe ahead, lots of new ground to
cover," he said, "but I'm really delighted."

Case in points

On Thursday morning, Block, Chacko and Catherine Keane, vice
president of membership rewards, held a fireside chat in front of agents. One
of the topics they focused on was agents' ability to use their clients'
Membership Rewards points to book travel.

Chacko pointed to the benefits of using Membership Rewards,
including that it could spur clients to purchase even more travel.

Travel Leaders Network president Roger Block said the Amex card program gives agents an edge in a competitive marketplace. Photo Credit: Jamie Biesiada

According to Keane, American Express' loyalty program is the
largest in the world and the oldest, launched 26 years ago. Of cardholder
benefits, she said the Membership Rewards program is the most important to
customers.

"The psychology behind points is very fascinating,"
Keane said. "People don't spend points the way they spend cash.
Personally, I'm not going to use my cash for a first-class ticket. I can't
justify that [while] trying to save for other things. But if I have enough
points to buy a first-class ticket, that's a whole different story."

According to Keane, people on average spend around 30% more
in points transactions than cash transactions, and they don't regret the extra
spending.

TLG agents can help clients use their points for things like
upgrading flights, adding another family member to a trip, or upgrading their
cabin class on a ship, she said. She encouraged agents to incentivize their
clients to spend more and take more trips using their Membership Rewards
points.

Keane also addressed the demographics of American Express'
card member base. Gold Card members in particular tend to be millennials, and
they want convenience, she said. Using points for travel is also popular among
that demographic.

During the talk, Block said the program's introduction had
been delayed somewhat after it was announced to agents last October.

In response, Chacko said it was an "extraordinarily
complicated undertaking" involving TLG, American Express, suppliers,
agents and card members. Once TLG realized it needed to take some extra steps
to implement the program before announcing it, Chacko said, the company slowed
down the process, something he called an "appropriate" delay.___